Filanto, SpA v. Chilewich Intern. Corp., 91 CIV 3253 (CLB).
| Citation | 789 F. Supp. 1229 |
| Decision Date | 14 April 1992 |
| Docket Number | No. 91 CIV 3253 (CLB).,91 CIV 3253 (CLB). |
| Parties | FILANTO, S.p.A., Plaintiff, v. CHILEWICH INTERNATIONAL CORP., Defendant. |
| Court | United States District Courts. 2nd Circuit. United States District Courts. 2nd Circuit. Southern District of New York |
Judith Passannante, Becker, Glynn, Melamed & Muffly, New York City, for plaintiff.
Robert Fryd, Warshaw, Burstein, Cohen, Schlesinger & Kuh, New York City, for defendant.
By motion fully submitted on December 11, 1991, defendant Chilewich International Corp. moves to stay this action pending arbitration in Moscow. Plaintiff Filanto has moved to enjoin arbitration or to order arbitration in this federal district.
This case is a striking example of how a lawsuit involving a relatively straightforward international commercial transaction can raise an array of complex questions. Accordingly, the Court will recount the factual background of the case, derived from both parties' memoranda of law and supporting affidavits, in some detail.
Plaintiff Filanto is an Italian corporation engaged in the manufacture and sale of footwear. Defendant Chilewich is an export-import firm incorporated in the state of New York with its principal place of business in White Plains. On February 28, 1989, Chilewich's agent in the United Kingdom, Byerly Johnson, Ltd., signed a contract with Raznoexport, the Soviet1 Foreign Economic Association, which obligated Byerly Johnson to supply footwear to Raznoexport. Section 10 of this contract — the "Russian Contract" — is an arbitration clause, which reads in pertinent part as follows:
"All disputes or differences which may arise out of or in connection with the present Contract are to be settled, jurisdiction of ordinary courts being excluded, by the Arbitration at the USSR Chamber of Commerce and Industry, Moscow, in accordance with the Regulations of the said Arbitration."sic
Ex. C to July 19 Simon Chilewich Affidavit. This contract was signed by Byerly Johnson and by Raznoexport, and is sometimes referred to as "Contract No. 32-03/93085".
The first exchange of correspondence between the parties to this lawsuit is a letter dated July 27, 1989 from Mr. Melvin Chilewich of Chilewich International to Mr. Antonio Filograna, chief executive officer of Filanto. This letter refers to a recent visit by Chilewich and Byerly Johnson personnel to Filanto's factories in Italy, presumably to negotiate a purchase to fulfill the Russian Contract, and then states as follows:
Ex. A to September 16 Melvin Chilewich Affidavit. The next item in the record is a letter from Filanto to Chilewich dated September 2, 1989. Ex. D to October 29 Filograna Affidavit. This letter refers to a letter from Chilewich to Filanto of August 11, 1989, which "you Chilewich sent me with the contracts n XXXXX-XXXXX-XXXXX." These numbers do not correspond to the contract sued on here, but refer instead to other, similar contracts between the parties.2 None of these contracts, or their terms, are in the record, both parties having been afforded ample opportunity to submit whatever they wished.
The last paragraph of the September 2, 1989 letter from Filanto to Chilewich states as follows:
Ex. D to October 29 Filograna Affidavit. The intent of this paragraph, clearly, was to exclude from incorporation by reference inter alia section 10 of the Russian contract, which provides for arbitration. Chilewich, for its part, claims never to have received this September 2 letter. In any event, it relates only to prior course of conduct.
It is apparent from the record that further negotiations occurred in early 1990, but the content of those negotiations is unclear; it is, however, clear that deliveries of boots from Filanto to Chilewich were occurring at this time, pursuant to other contracts, since there is a reference to a shipment occurring between April 23, 1990 and June 11, 1990. Ex. H to December 4 Simon Chilewich Affidavit.
The next document in this case, and the focal point of the parties' dispute regarding whether an arbitration agreement exists, is a Memorandum Agreement dated March 13, 1990. This Memorandum Agreement, number 9003002, is a standard merchant's memo prepared by Chilewich for signature by both parties confirming that Filanto will deliver 100,000 pairs of boots to Chilewich at the Italian/Yugoslav border on September 15, 1990, with the balance of 150,000 pairs to be delivered on November 1, 1990. Chilewich's obligations were to open a Letter of Credit in Filanto's favor prior to the September 15 delivery, and another letter prior to the November delivery. This Memorandum includes the following provision:
"It is understood between Buyer and Seller that USSR Contract No. 32-03/93085 the Russian Contract is hereby incorporated in this contract as far as practicable, and specifically that any arbitration shall be in accordance with that Contract."
Ex. A to July 24 Simon Chilewich Affidavit. Chilewich signed this Memorandum Agreement, and sent it to Filanto. Filanto at that time did not sign or return the document. Nevertheless, on May 7, 1990, Chilewich opened a Letter of Credit in Filanto's favor in the sum of $2,595,600.00. The Letter of Credit itself mentions the Russian Contract, but only insofar as concerns packing and labelling. Ex. A to December 4 Simon Chilewich Affidavit.
Again, on July 23, 1990, Filanto sent another letter to Chilewich, Ex. D to October 23 Filograna Affidavit, which reads in relevant part as follows:
It should be noted that the contract referred to in this letter is apparently another contract between the parties, as the letter refers to "Sub. Contract No. 32-03/03122", while the contract sued on in the present action is No. 32-03/03123.
This letter caused some concern on the part of Chilewich and its agents: a July 30, 1990 fax from Byerly Johnson, Chilewich's agent, to Chilewich, mentions Filanto's July 23 letter, asserts that it "very neatly dodges" certain issues, other than arbitration, covered by the Russian Contract, and states that Johnson would "take it up" with Filanto during a visit to Filanto's offices the next week. Ex. G to December 4 Simon Chilewich Affidavit.
Then, on August 7, 1990, Filanto returned the Memorandum Agreement, sued on here, that Chilewich had signed and sent to it in March; though Filanto had signed the Memorandum Agreement, it once again appended a covering letter, purporting to exclude all but three sections of the Russian Contract. Ex. A to December 11 Filograna Affidavit.
There is also in the record an August 7, 1990 telex from Chilewich to Byerly Johnson, stating that Chilewich would not open the second Letter of Credit unless it received from Filanto a signed copy of the contract without any exclusions. Ex. C to December 4 Simon Chilewich Affidavit. In order to resolve this issue, Byerly Johnson on August 29, 1990 sent a fax to Italian Trading SRL, an intermediary, reading in relevant part:
Ex. D to December 4 Simon Chilewich Affidavit. Filanto later confirmed to Italian Trading that it received this fax. Ex. G to December 4 Simon Chilewich Affidavit.
As the date specified in the Memorandum Agreement for delivery of the first shipment of boots — September 15, 1990—was approaching, the parties evidently decided to make further efforts to resolve this issue: what actually happened, though, is a matter of some dispute. Mr. Filograna, the CEO of Filanto, asserts that the following occurred:
December 11 Filograna Affidavit at ¶ 5.
Mr. Simon Chilewich, in his sworn affidavit, does not refer to this incident, but does state the following:
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